By Ted AYALA
The message from City Treasurer Ron Barucki to the City Council was serious but not dire when he announced to the City Council on Tuesday of a drop in value in the city’s investment portfolio. The portfolio closed the second fiscal quarter at $396 million, down $2 million from the end of the previous quarter.
The slide was participated by low interest rates imposed by the Federal Reserve. Barucki stated that it was “remarkable that after three years of historically low interest rates, rates have yet to improve.”
“It’s even more remarkable that these rates continue to fall,” he added.
“The [Federal Reserve] announced that short term rates should continue at historically low levels for another three years, through 2014,” said Barucki. “This announcement reflects a more sobering view of the economy. In the eyes of the [Federal Reserve] the economy needs a lot more help. Time will tell if [they] are right.”
He noted that improvement in unemployment and the Greek financial crisis reflects “good news for the coming year.”
Councilman Frank Quintero asked Borucki whether he had maxed out the percentage that the city could invest into corporate holdings.
The city of Glendale imposes a limit of $15 million on corporate bonds.
“Not as of December’s report,” Borucki replied. “But we’re probably $7 or $8 million away.”
He quickly added that the average returns in corporate bonds have been “awful.”
He then explained to the Council that he increased the city’s investment in Toyota.
“I believe we’re getting a good name with them,” he said.